Supreme Court Overturns Ra Deok-yeon Verdict in 'SG Stock Manipulation' Case... "CFD Transactions Also Guilty"

First Trial: 25 Years in Prison
Second Trial: 8 Years

The Supreme Court has overturned the original verdict against Ra Deok-yeon, CEO of Hoan Investment Advisory, and his associates, who were responsible for the SG (Société Générale)-triggered stock plunge incident that disrupted the capital market through stock price manipulation, and has sent the case back to the Seoul High Court for retrial.

Yonhap News Agency

The Supreme Court's Third Division (Presiding Justice Noh Kyung-pil) on the morning of May 20 set aside the original court's acquittal on grounds of insufficient evidence in the appeal trial for Ra and 10 other defendants indicted for violating the Capital Markets Act and the Act on Regulation and Punishment of Concealment of Criminal Proceeds, and remanded the case to the Seoul High Court after reaching a different conclusion regarding the guilty verdict.

The main point of contention in this trial was whether orders placed using contracts for difference (CFD) accounts could be regarded as trading of listed securities, which is prohibited under the Capital Markets Act. The appellate court had previously ruled that since CFDs are, by law, classified as over-the-counter derivatives, prosecuting transactions using them as price manipulation offenses would violate the principle of legality in criminal law, and accordingly delivered an acquittal on those charges due to lack of grounds.

However, the Supreme Court reached a different conclusion. The court stated, "Even if the defendants' orders using over-the-counter derivatives—where a significant portion is expected to result in trading of listed securities or exchange-traded derivatives—are routed through securities firms and immediately lead to collusive trades or similar transactions that constitute market price manipulation of listed securities or exchange-traded derivatives, the offense of violating the former Capital Markets Act due to market price manipulation is established." The court judged that the defendants can be found guilty even if they did not directly engage in collusive trading or other manipulative acts involving listed securities or exchange-traded derivatives.

Ra is accused of manipulating the stock prices of eight companies from January 2019 to April 2023, illegally obtaining approximately 730 billion won in unjust gains and concealing criminal proceeds totaling 194.4 billion won. At the first trial, Ra was sentenced to 25 years in prison, a fine of 146.5 billion won, and forfeiture of 194.5 billion won; however, at the second trial, his sentence was reduced to eight years in prison, a fine of 145.6 billion won, and forfeiture of 181.6 billion won.

The Supreme Court explained, "This is the first time that the court has established a standard that the offense of market price manipulation can be applied even when over-the-counter derivatives transactions lead to orders for listed securities."

This content was produced with the assistance of AI translation services.